The rand gained for the first time in three days, rebounding from the biggest one-day slump in six months, as some metal prices rallied and investors gauged the currency’s decline was overdone.
South Africa’s currency strengthened 0.6 percent to 9.1458 per dollar by 8:57 a.m. in Johannesburg. The rand sank 2.9 percent yesterday, the most in a day since Oct. 5. Yields on benchmark 10.5 percent bonds due December 2026 rose two basis points, or 0.02 percentage point, to 7.09 percent.
Gold rebounded as some investors deemed a 14 percent plunge over two days to be excessive and after an Asian central banker said that policy makers may take the opportunity to buy. Silver, platinum and palladium advanced, boosting the currencies of commodity-producing countries including South Africa, Australia and Canada. Metals and other mining commodities accounted for 53 percent of South Africa’s exports in 2012, according to government data.
“The Australian and Canadian dollars have gained ground this morning on a combination of a firmer gold price and a generally weaker U.S. dollar, and it follows that the rand will follow suit,” Quinten Bertenshaw, a Johannesburg-based analyst at ETM Analytics, said in e-mailed comments.
Gold for immediate delivery traded as much as 2.4 percent higher in Singapore after dropping as much as 9.9 percent yesterday. Platinum climbed 2.7 percent, rebounding from an 18- month low.
The rand’s plunge yesterday came after third-quarter economic growth unexpectedly eased in China, the biggest buyer of South African commodity exports including iron ore and coal. The currency’s decline may be overdone given the outlook for the economy, said John Cairns, a currency strategist at Rand Merchant Bank in Johannesburg.
“It seems oversold at current levels and the downward slide should lose momentum,” Cairns wrote in e-mailed comments. “However, the fact that Asian markets continued to weaken overnight suggests the downside risk to the local unit remains high today.”
Deadly bomb blasts near the Boston Marathon’s finish line may also spur further rand weakness, Bertenshaw at ETM said.
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